April 17, 2007


China's Sinopec, Cofco agree to build fuel ethanol plants


China Petroleum & Chemical Corp., or Sinopec, last week signed an agreement with China National Cereals, Oil & Foodstuffs Corp., or Cofco, to jointly build fuel ethanol plants as part of Sinopec's efforts to develop biomass energy.


Under the agreement, signed Apr 13, Asia's largest oil refiner by capacity and the state-owned grains trader will build plants within five years to produce a total of 1 million to 1.2 million tonnes of ethanol annually, Sinopec's parent company China Petrochemical Corp. said on its website Tuesday. It did not say how much the project would likely cost.


The statement also did not say how many plants would be built, where they would be located or whether the ethanol to be produced would be corn-based.


China is discouraging corn-based ethanol development - instead promoting non-corn materials such as sweet potato, cassava and sweet sorghum - because of food security concerns, as corn is a food staple for people and animals.


Sinopec's tie-up with the country's largest grain producer came after its rival, PetroChina Co., signed an agreement in January with the State Forestry Administration to jointly develop biomass projects in Yunnan and Sichuan provinces in south-west China.


PetroChina plans an annual ethanol capacity of 2 million tonnes by 2010-2015, which would account for 40 percent of the country's ethanol output capacity. PetroChina, China's second-largest oil refiner after Sinopec, is a unit of China National Petroleum Corp.


Since the middle of last year, Sinopec and Cofco have been jointly building a plant to produce 200,000 tonnes of ethanol a year in southern Guangxi Zhuang Autonomous Region.


Cofco is the parent company of Hong Kong-listed Cofco International Ltd.


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